Despite the fact that often times the majority rules, that doesn’t mean the majority is right.

The most poignant example comes from a premier venture capital firm I once worked for. One of the opportunities they gave their investment professionals was the opportunity to invest personally and on a discretionary basis in each round of each financing the firm participated in. You didn’t have to invest, or you could “max out”, or you could do anything in between. There was a maximum amount you could put into each round based on your level in the firm.

Most interestingly, after each financing round closed, they would publish to the entire investment team how much each person invested for their discretionary investment in that round. There is no better way to tell how a person feels about an investment than to see the size of their personal check. It was the most honest moment of the entire investment discussion. There were certainly cases when everyone in the firm maxed out their personal investment (e.g. the “max out scenario”). And, there was a similar frequency of cases when nearly everyone didn’t participate except the individual partner sponsoring the deal (e.g. the “zero out” scenario). These decisions were always made after individuals would talk to each other behind the scenes to discuss how much they were going to put into each investment – they were rarely made in isolation.

What I learned from watching these personal investment decisions made over and over again was somewhat surprising. A great predictor of failure for an investment was when the max out scenario took place. If everyone loved a deal and backed up the truck on their personal investment, it was more than likely to not succeed. In fact, those deals often failed in quick fashion. The inverse was surprisingly true as well. More often than not, for those investments where the zero out scenario took place, they often became successes – sometimes the biggest successes. At the other firms I have worked at, various forms of this experiment have taken place and this observation holds true through different economic times, different investments, and different firms.

Why? How can it be that when a group of intelligent, seasoned investment professionals agree – they are often wrong? The answer is simple: investment partnerships are the perfect breeding ground for groupthink. Groupthink according to Wikipedia is: “a psychological phenomenon that occurs within groups of people…. Group members try to minimize conflict and reach a consensus decision without critical evaluation of alternative ideas and viewpoints.” There are important cases in history where groupthink played a material role such as in Pearl Harbor and the Bay of Pigs.

The reason venture partnerships foster groupthink is best articulated by Irving Janis, a pre-eminent researcher on groupthink. He suggests that certain contextual ingredients make groupthink more likely including:

High Group Cohesiveness

Group Insulation

Lack of Impartial Leadership

Lack of Norms Requiring Methodological Procedures

Homogeneity of Members’ Social Background and Ideology

Venture partnerships are often cohesive, insulated, and homogeneous groups – a perfect breeding ground for groupthink.

How do you protect against groupthink? I think you simply ask yourself two questions trying to be as impartial as possible:

Ask yourself – could the dissenting opinion be right? Listen to and fully understand the point of view of the person expressing a dissenting opinion, especially if that person is the sole voice in the room. Fully consider their point of view as it may very well be the right one. Give it weight in your mind.

Ask yourself – could your majority opinion be wrong? Have you arrived at your opinion without sufficient critical analysis? Are you basing your position on assumptions that you presume to be true, but that perhaps are not sufficiently tested or researched? Be humble, don’t think too highly of your own point of view.

Until you’ve understood how your majority opinion could be wrong, you should strongly question whether your opinion is right. Until you’ve understood how a dissenting opinion could be right, you should strongly question whether it is wrong. A great and simple test is whether you can argue both the majority and dissenting opinion well – irrespective of which one you hold.

The best venture partnerships understand this dynamic and take it into account in their decision-making. One firm I used to work at mandated a dissenting partner on all deals. Another firm always allowed for a single champion to carry a deal through rather than requiring partnership consensus. While groupthink may ultimately exist within the partnership model, it doesn’t have to be nor should partnerships let it be the deciding factor at the end of the day.

Given Volition’s focus on bootstrapped high growth technology companies, we meet company founders every week that have built amazing companies with very little resources. It never gets old hearing stories of how founders put companies on their backs and will them to survive and succeed.

Yet, in the process of meeting with founders week-in and week-out, I have begun to notice that with some regularity, certain founders refer to their company as “I”. Often, I will hear phrases like, “I will reach $20M of revenue,” or “I will grow 100% next year and hit breakeven,” or “I will have the best technology platform in the market.” On the face of it, it might seem objectionable to refer to the collective efforts of many people in a company with a first person, singular pronoun. Yet, candidly, I don’t entirely begrudge the practice, but it also reflects a company that is still in the process of maturing.

I don’t begrudge it because there was a point in time when the company was quite literally just the founder. If anything was going to get done, the founder was going to do it. Even in the early days of a company where there are other employees, it’s not uncommon to have the founder be the senior person for every functional aspect of the business. The founder is both the head of sales and by default the top salesperson. The founder is the product visionary, product developer, and only QA person. The founder is effectively the chief financial officer and the chief financier of the company. And, of course the founder is the energy and spirit of the company. I don’t begrudge use of the term “I” to refer to the company because for many of these companies, without the founder, there would be no company.

But, it also refers to a company that has some maturing to do. Even if a founder is seemingly indispensable to a company – like Steve Jobs, Jeff Bezos, or Sergey Brin – a company must grow to the point where the center of the company isn’t the founder, but the center of the company is in fact the company itself, and its mission for its customers. Ironically, the person best positioned to help drive this transition in a company is the founder.

Some founders adopt a mentality to keep things comfortable for themselves – the strategy, people, and practices of the company stay within the comfort zone of the founder. The founder structurally builds a company where they are at the center and in many ways the company exists not only because of the founder, but to serve the founder as well. Other founders aim to build something bigger than themselves. The company is not defined by their own comfort zone, but by the vision of what the company can achieve. The company exists not for any single individual, but for its greater mission and purpose. The company transitions from an “I” to a “we”. This can be an uncomfortable process for some founders, but often times it’s a necessary one in order for the company to reach its fullest potential.

I have immeasurable respect for founders. Day-in and day-out, I’m rooting for the founders of companies that we invest in and even the founders of companies that we don’t invest in. There are many people that work at a company, but only one founder or founding team. It’s a special and unchangeable position. But, for companies to truly succeed, they can’t just be about the founder. They need to be about something more. And, that’s perhaps a goal all founders can aspire towards.